Thank you very much. Welcome to this presentation of Pandox Interim Report for the third quarter and the first nine months of 2020. I'm Anders Berg, Head of IR at Pandox. With me I have Anders Nissen, our CEO, and Liia Nõu our CFO. Like last time, we also have two external guests with us. Robin Rossmann, Managing Director International at STR, and Johan Johander, Partner and Head of Research at Benchmarking Alliance. As you well know by now, Robin and Johan represent leading independent research firms, totally dedicated on the hotel market, and they will share their view on the market later today. We are very happy to have them on board for this presentation. The presentation today is divided into three parts. First of all, Anders and Liia will present the business update and the financial highlights for the third quarter.
We hand over to Robin and Johan for the external hotel market update. We conclude everything with a Q&A session. With that, I hand over to Anders. Please go ahead.
Thank you very much, and welcome also from my side, and good morning. First, short Pandox business update. Pandox is one of the largest hotel property players in Europe with a well-diversified portfolio. We own 156 hotels in 15 countries and in 90 destinations. We have two business segments: Property Management and Operator Activities. Property Management is our lease portfolio, where we sign turnover-based leases with minimum levels together with the best operator, and together with our partner, constantly develop hotel by share investment. The other part is Operator Activities, where we own and operate under a franchise brand or a brand we create ourselves, so-called an independent brand. The Property Management, the lease portfolio representing 84% of the company's value, and the Operator Activities where we own and operate, representing 16% of the company's value. This well-diversified portfolio has focus on domestic and regional hotels.
More than 80% of Pandox portfolio has profile of being a domestic or regional brand, maybe more important than ever to say. That is a strategy that we have choose the day one. Next page, please. We have probably the best network of brands and partners in Europe, which give us a very strategic position where we can have a very flexible way of looking at every hotel and create tailor-made strategy hotel for hotel. That also give us a chance to be active in the full value chains. We have a capacity of operate hotels as well as giving the assignment to someone to manage it for our side or operate or have a lease model. As you can see, many important brand and very strong. Scandic, Radisson, Hilton, Eurostars, and Leonardo is a few of the largest player that we are working frequently with.
Next page, please. Just a few brief comments about the Q3, which just have sent out. We believe that recovery is in the line with expectation. We see a good growth compared to Q2 with a strong summer driven by domestic leisure demand, and we have seen the initial demand from domestic business. I will come back to this later on. Continuous strong financial liquid position, and today what's holding back our demand is government restriction, which is our biggest threat. Some numbers, - 5% on return on equity, - 47% in total NOI, and - 37% NOI for Property Management. The most important perhaps is how we have our very strong financial position, the liquidity funds and the credit facilities, about SEK 5.3 billion. With that, I hand over to Liia.
Thank you, Anders. Now we are on page five, COVID effects on Pandox. Yes, as Anders said, demand in the hotel market was low in the third quarter, and contractual minimum rent and fixed rent were Pandox main sources of income. We expect this to be the case also in the fourth quarter. During the third quarter, when restrictions eased, we saw a strong increase in demand from domestic leisure. We had negative unrealized value changes in both Property Management and Operating Activities, which reflects lower expected cash flow in 2020, 2021, and 2022. I'll come back to this in a minute. Trade accounts receivable have temporarily increased due to new and temporary payment terms for tenants in Property Management. At the end of the third quarter, accounts receivable related to new payment terms amounted to some SEK 421 million.
Next page, please. Page six. Pandox revenue base is diversified with revenue from current operation models and geographies. Currently, minimum rent and fixed rents are Pandox main sources of revenue. These amount to approximately SEK 2 billion per year or approximately SEK 500 million per quarter. Out of our 136 hotels in Property Management, 110 hotels have revenue-based rents, but with a minimum guarantee level. In the third quarter, we also had pure revenue-based rent of SEK 69 million, coming from the remaining 26 hotels with pure turnover-based rent without the minimum guarantee. Then on top of that, revenue from Operating Activities of SEK 169 million. Rent collection has progressed in line with new and temporary payment terms, and no reductions in hotel rents have been given.
Next page, please. Page seven. In the third quarter, Pandox valued the property portfolio according to the same method and model we used since the IPO 2015. We have made downward adjustments of property values due to lower cash flows in 2020 through 2022 as a direct result of COVID-19. Yields have been left unchanged due to still inconclusive transaction evidence. As we learn more about the effects of COVID-19 crisis, we expect to be able to estimate both yields and cash flows with greater precision in the coming quarters. Only a few external valuations were made in the third quarter, primarily because of practical limitations due to COVID-19. In the third quarter, total unrealized changes in value amounted to -SEK 599 million, out of which a -SEK 315 for investment properties and a -SEK 284 million for operating properties.
Please note, as usual, that according to IFRS, unrealized changes in value for operating properties are only reported for information purposes and is included in the EPRA number. End of period, the average valuation yield for investment properties was 5.42%, and for operating properties, it was 6.38%.
Next page, please. Page eight. Finally, let's take a quick look at our EPRA NAV and financial position. End of period, EPRA NAV per share amounted to around SEK 175. This corresponds to a decrease of approximately -5% on an annualized basis, adjusted for the proceeds from the directed share issue, which we did in November 2019. Loan- to- value amounted to 48.5%, and liquid funds and long-term unutilized credit facilities amounted to approximately SEK 5.3 billion. In the third quarter, all credit facilities maturing in 2020 corresponding to approximately SEK 4.3 billion, were extended by between 12-18 months.
Pandox has a positive and close dialogue with our lenders on new financing, refinancing, as well as adjustment of terms and covenants in existing credit agreements with consideration to COVID-19. In the third quarter, lenders have been given waivers in individual credit agreements. Next page, please. With that, I hand over to Anders again.
Thank you very much, Liia. Now we are at page number nine. Since this crisis started in the spring, we had been working on three focus areas: respond, restart, and reinvent. Respond is how we manage this acute phase of the crisis. You can say we, over a weekend, changed our business model from being active buyer of hotel, very active in doing value-driven investment together with our partners and operate the large international operations. From that position, we changed over the weekend to secure liquidity, working close to the banks and our partners to make sure that we got very quick control in this new situation. That is still our main focus, but of course, we have started to look a lot at restart, the plan for recovery.
We have already, as you know, who follow this closely, presented two forecasts before, and I will very soon do the scenario is 3.0 here. We also have spent a lot of time during the summer and after the holiday period, but reinvent, and that means basically what's next. How consumer segments are developed, investment, brand, how different segments are developed and what that means for our business models. We have created a lot of new knowledge into the company as well. I will now do the market outlook 3.0 with this, as said before, the third update since the start of the pandemic. We believe it's super important than ever to share all the information we have so the speculation can be small as possible. That will be divided in two ways.
Talk about the six development levels for recovery, after that, talk about different phases that the market will come back for. First, the six development levels to get back to full performance. As we present before, we believe there is six levels. The first is city and country open up, the second one is hotel open for business. The third one is when domestic leisure is return. The fourth one is domestic business return, we believe international meeting come close to each other and group return will come as the last segment. When we spoke the first time in Q1, we were at level one and two. When we spoke in the summer, we were at level three, now we are something between level three and four.
Next page, please. Everybody starts on the same point. The first phase, what we call the past. The past is that the COVID-19 arrived in Northern Europe in March this year. As we remember, society closed down, travel restrictions was implemented, occupancy record low, and market bottom out late April and early May.
Next page, please. Phase II, summer holidays. In late May and June, restriction was gradually eased, and domestic travel was allowed. What happened was that domestic leisure demand returned quite immediately. In the Nordic, occupancy rose rapidly from 20% to 60% during the summer period, measured on rolling 12. We saw a similar pattern in domestic market across Europe. Germany, Spain, France, U.K. had the same sort of pattern as we had in the Nordic. A driver was to travel, meet friends, and experience life outside lockdown. A super strong demand driver who really maybe surprised many of us.
As expected, larger city like London and Stockholm was as expected, weaker demand due to, I will say, a combination of international travel where they have a dependency and that most of the attractions in the big city was basically closed. No surprise that they were less good as the domestic market. Next page, please. Phase II . After the summer holidays, which happened in mid-August for Nordic and September for the rest of Europe, we saw that the leisure segment, which had been very strong during the summer, during the holiday period, decreased during weekdays but remained stable over weekends, and that is still the case. Domestic corporate returned gradually. Small and medium-sized company begin to travel. Lower demand for larger company due to result of travel restrictions.
Domestic market here in September in U.K., Germany and the Nordic established at level for 40%-55% occupancy. International markets saw a certain increase from low levels. Overall, I believe that there was a stronger market development than many expected. This also shows hotel market is performing. Are you in big cities? Specifically, you're sitting at home, you believe that the world is dark. If you live outside domestic market in Sweden, Germany and U.K., it was much lighter and there also we have most of our hotels. If you go per number, next page please, you see what I know have been talking about in numbers. Germany, this is the total market in Germany. Occupancy January to September. You see a good start and then bottom out in April and then gradually it's coming back to a little bit above 40% in a quite large market.
You go to the next page, please, which is regional U.K. Occupancy also January to September, where market bottomed out in April and May and June. As you remember, U.K. has a strong restriction into beginning of July, but after that the market was very strong and August, September came up over 50%. If you go over the next page, which is page number 70, Nordic regional. The regional in Nordic as you saw bottomed out in April, very strong demand over summer and has come down to close to 50% in the end of September.
Before we look ahead, let's look at few of these current trend we see in the market. The largest and most important segment in hotel business, domestic travels, this is a combination of leisure and business, has made comeback, no doubt. Slower recovery from international markets. We see the first sign of smaller meetings, most of them, or I will say the majority is domestic meetings. Resort mid-scale economy hotels in domestic markets with, as we say, drive, train to distance are the winner so far. Interesting, people who are not allowed to travel for business, they travel privately at weekends. My personal expectation is that trend had been stronger than after the holiday. Restrictions. When restrictions go down, demand go up and other way around. There is also indications of restrictions begin to affect the market unevenly. We should look at that.
What's happened at the moment, everyone, is that had coming a new, as many expected, virus spread and new restriction which is different for different company. This is a chart to show what happened in U.K. the last month from mid of September where they were that week at 56% occupancy, h as come down to 44%. It looked like they had level out, but we don't know that yet. We track this more or less every day. If you look at the numbers for Germany, which is the total market of Germany, it's 44%, had come down to 33%, and that is also the last five weeks which compared to each other. You look at the Nordic, it's not the other way around, but the Nordic has come up a bit. We can see that end up now close to 50%.
Ladies and gentlemen, what will this be our effect for Pandox in Q4? At phase IV, year-end up to 2020, is our sentiment is that new restriction will have a mixed impact. Marginal impact in Sweden, Norway and Finland. We will see negative trend in Germany. We don't know how negative it will be, but we see a negative trend at the moment. Larger impact in U.K., Belgium, Netherlands and Denmark. That means that our guidelines here is that we expected a stable revenue for Property Management. We expect operator activities will be slightly weaker, specifically because Belgium and The Hague is in red soon. It's very sad because in Brussels we had a fantastic business on the books for Q4, which has now been postponed, and hopefully that will come back in near future. New restriction are pushing the recovery a bit further out.
The effects are limited for Pandox. The portfolio dominated by domestic and regional hotels. The strategy, if I may say so, give us some sort of payoff. We had a strong focus on Nordic. Nordic is normally more stable in stormy weather, and we have the lease model with the minimum guarantee rent. That means that we will have a quite stable Q4 in our expectation and some effect, of course, on operator activities. If you go to page number 24, not before Q&A, before the presentations, the external presentation. This is where we are today of these six development levels to get back to full performance. As I said, when we met the first time, we were at level one and two.
In the summer, we were at number three, now we see the first sign that Sweden and Norway and Germany are on business return, at least if you look at from domestic side. That China had now moved to international and meeting return has a super strong development with Robin will come back to. With that, I hand over for Robin Rossmann. Welcome, Robin.
Thank you, Anders. It's great to be here. Can I just check that my audio is all good? I'm going to go ahead and assume the above otherwise. You should be turning over now to slide 25, which is the headline, what now, what next, what future? That's broadly how I'm going to approach this. Just give an update on where the recovery has got to around the world now, and then really focus on what we expect to see in performance in the short term and in the long term. Starting with what now on slide 26 and onto 27.
You can see here that the trend of the number of rooms that closed around the world in purple going all the way back to January, then the average occupancy across the world in blue, with the index on the sort of the y-axis for that on the right-hand side. You can see the devastating impact, the number of hotels, and this is the sample of hotels that we track. This is not all hotels in the world, but it is indicative of the trend across the world. 3.5 million of hotels reporting to us, rooms of hotels reporting to us closed, and most of those have now reopened. About 85% have reopened, with just about 0.5 million that are left still closed.
As the restrictions around the world were in place, we saw occupancies go down quite significantly and then recover to really better levels than most expected as we got into a much stronger July and August than many expected because of good leisure demand, as Anders talked about. Since then we have seen a flatline. The question is, where is it going to go next? The answer to that question really does depend on not just where in the world you are in terms of what country. It also depends on what market. Are you in a city, large city, or are you outside a large city? It also depends on what scale of hotel you have. Is it a budget hotel? Is it a luxury hotel? I'll touch on that in a bit more detail.
Before I do, on slide 28, you can see the level of hotel closures, and this is expressed as a percentage of total supply from January all the way to where we are now. You can see that China and the U.S. only had about 20% of their hotels closed, and most of those are now reopened, whereas a selection of markets across Europe, we saw much higher closure rates and underpinned by much stricter government lockdowns. We did see those reopen through the summer months, and now generally around 10%-20% hotels still left closed, but the majority have reopened.
Onto performance then, on slide 29, you can see how China's occupancy has recovered from February through to where we are now, and that really after seven months of its low point in February, it reached a new normal. Talk a bit about where that is versus prior year in a bit, and it's been staying at that sort of high 50% to almost 70% occupancy. Moving on to slide 30. You compare that to the U.S. and the Middle East, which took a couple of months longer to drop down as the virus took longer to spread there. Didn't drop as low to only it's about 20%-30% occupancies. Have recovered to 40%-50% occupancies, and have flatlined there. I think it's actually quite interesting to see how resilient the U.S. has been despite the surge in cases that have been happening there since really July. That is underpinned by really less strict government controls over movement there.
Moving on to slide 31. You can see Europe and Africa impacted the most in the world in terms of performance. Europe dipping down lower and stuck at really close to single-digit occupancies all the way, really until things started reopening in June. We did see the summer recovery, but we have seen that tail off in the last month. Africa taking longer to get back there with strict lockdowns, particularly in South Africa, and less international demand coming in there.
Moving on to slide 32. As I mentioned, even though we look at things at a country or regional level, if you look at individual sub-markets, which we're showing here, and occupancies across the world, it really does vary significantly within Europe. Some less than 25%, some greater than 50% occupancy, some even at this stage, we're still more than 75% occupancy at the beginning of October. That's true all around the world. We'll go into that in a bit more detail.
One overall trend you can see on slide 33 is the major gateway cities have definitely had it harder. Occupancies there much lower than the surrounding country performance or regional markets. That is because of the reliance on these gateway cities in terms of hotel performance, more on business demand, more on international demand, which, as Anders mentioned, has not fully come back yet. Onto some good news, that is looking at performance in China, where you can see, looking at those occupancy levels I showed earlier, instead expressing it as a percentage change on prior year, that occupancy across China is now within seven months of the worst days of the pandemic, back to prior year levels.
It's recovered faster in outside tier one cities, but even tier one cities are getting back to their prior year level of occupancy, and that really is quite phenomenal if you think about it. When you add on average room rates and look at RevPAR on slide 35, you can see again, that not only have occupancies recovered, but rates have recovered, and we're seeing RevPAR levels back to prior year positions. Now, that does definitely give us cause for hope and optimism, and we shouldn't lose that. It's also important to recognize the criteria for reaching this level of performance. That is, China has not had more than 100 new daily cases of COVID since March this year. Up until recently, I think had close on two months of no locally transmitted cases of COVID.
China has a massive outward bound tourist market that has not been allowed to travel to the rest of Asia, has not been allowed to travel to Europe, to the U.S., and so has been pointed inwards. China has benefited not just from no cases and removal of restrictions on people's movements and no requirements to have masks. Colleagues that I have there have been to weddings where there've been over 1,000 people. Life has returned to normal there. It has also benefited from a massive outward bound tourist market that's been turned inwards, and that is what has helped this recover so quickly. It's important to see this and remain optimistic, and this demonstrates that hotel demand and travel will recover.
Will its recovery be as quick elsewhere in the world? Unfortunately, I don't think that's the case, and we can talk about that in a bit. That recovery will come once the virus is under control.
Moving on to Europe on slide 36. It's fair to say summer was strong. It's also fair to say that there has been a downturn unilaterally across all European countries since September. You can see that general trend, occupancy dipping back and trending down into October. Just breaking those up a bit and looking on slide 37, you can see that some of the countries that have been impacted the worst in terms of that decline have been those countries that had the strongest resurgence of cases earlier on in Europe. Belgium, unfortunately, leading Europe with cases coming back as early as August, and you can see that declining there first.
Croatia, Czech Republic, Netherlands, Spain, all having significant surging in cases, increase in restrictions, which has seen occupancy levels go back to not the April, May levels, but back to the sort of mid-June levels, around 10%-20%. Quite challenging. Quite different when you look at some other countries on slide 38. France, Germany, U.K., a bit stronger. Occupancy's coming back off the 50%-60% levels down to the 30%-40% levels. As I mentioned earlier, the story isn't the same everywhere in a country. If you move on to slide 39, you can see for the U.K. how significantly different the performance is. Firstly, between London, which is the solid lines at the bottom of the chart showing percentage change in occupancy from prior year, versus regional markets, which is in the dotted lines.
Another layer on top of that is looking at the performance by class of hotels. Just going back to London, you can see that luxury hotels, the solid blue line, have been trending at - 80% occupancy versus prior year. Compare that to economy and mid-scale hotels in regional markets, which is in purple, and the dotted line, you can see that occupancy's there trending at about - 20% to - 30% behind prior year levels. The story here is London and indeed across Europe, major gateway cities experiencing much more significant declines in performance. When you segment that, the luxury hotels struggling more than budget and economy hotels, which are being more resilient. The upscale mid-market hotels in the middle, being also in the middle of performance between those luxury and budget.
There is a slight twist to this. It comes in those regional markets outside city centers for higher-end hotels. You can see on slide 39 that actually the luxury performance and top-end hotels, in terms of occupancy, isn't that far behind budget and economy. When you move on to rate on slide 40, it's interesting to see there that it's actually flipped. If you look at those regional luxury upper upscale hotels, they're actually achieving year-on-year rate growth. That is because, particularly in markets like the U.K., like Germany, similar to China, large outward bound tourist markets turned inwards for the summer holidays.
Really less supply at that high end to satisfy that demand meant that whilst some hotels might not have been full midweek, they were absolutely sold out on the key leisure nights and continue to be sold out on key leisure nights, which has enabled them to grow rate even though occupancy's been behind prior year levels. Moving down in the cities, also luxury being a bit more resilient, but rates still declining. Looking at Germany on slide 41, a similar pattern, but much tighter, because of the dominance and the more spread out demand across the federal system with the seven large cities in Germany. Much tighter split, but still it's true to say city occupancy is lower than regional markets.
Still also true to say luxury occupancy is a bit lower than mid-scale and economy, but again, much tighter because the gaps in those segments are much tighter in Germany than they are in the U.K. On slide 42, just looking at rates similar to the U.K., but tighter gap. What future? Well, we'd usually go on and show business on the books data here, but I haven't today, really because all it is showing at the moment is that trend in declining performance that we've seen going into October is certainly continuing into November and December. I think we are reaching a new normal where occupancies will be not as bad as they were in the worst of the crisis, as long as the lockdowns don't get to that level.
At the levels, kind of that where we are now, going forward into the rest of this quarter and into Q1 next year, unless there is a greater control of the virus, and/or cure coming through, which is what we're forecasting. I'll talk about that in a bit, but moving on to slide 44. Really going more towards the long term before we go back towards the sort of the medium term. Similar to China, we do think demand will recover. We think that travel patterns will change, and certain demand will come back faster than others, and certain demand may change forever.
Overall, we still think that travel demand will come back. Some of the key areas to think about with that is that domestic will definitely continue to be a strong driver, both in the short term and I believe in the longer term, t hat the importance of domestic travel will probably grow over international. In the short term because of the fact that there are less barriers to recovery than international, and where countries are able to get their own businesses under control, they will allow travel domestically before internationally. There'll be less barriers to entry, less reliance on international airlines. That will come back, and that will dominate both from a business and a leisure perspective. I think that will remain true in the longer term too, as domestic work is a greener travel choice.
We will see more work from home. I personally am a believer in the importance of the office, and I think the office will come back and cities will come back. There's no doubt that some companies and some people will increasingly choose more work from home. Actually, I believe that's incredibly positive long-term demand driver for our sectors. Both for business travel, as more people are traveling to the office further away from home and staying there for when they need to. Also for leisure travelers, they have less commuting time, more flexibility to travel for leisure and for pleasure. That'll drive demand.
Then I do think group and mass demand will get back. Even if there is more use of video technology, it won't take away the need for that face-to-face connection. Those kinds of meetings are still incredibly effective there, both for internal business meetings and for external client meetings. That will take the longest to recover.
What do we think in terms of recovery? On slide 45, you'll see just a profile of a selection of European cities, where we expect RevPAR to be down about 72% this year. To recover so that for 2021, we expect RevPAR to be about 40% below 2019 levels. That may sound optimistic. That is underpinned by a cure being discovered towards the end of this year and being made available from Q2 next year, so that we start seeing a business recovery or a travel recovery from Q2 next year. A stronger summer than we've seen this year and continued recovery into the end of next year. A lot of that does depend on the timing of a vaccine or cure.
Certainly at the moment, it looks like that might be pushed out a bit slightly, take a bit longer to come through, but ultimately, we do believe that will enable travel, and it'll enable travel before entire countries are vaccinated. I think once individuals are able to obtain access, once people are able to prove that they're not going to carry the virus, travel will be able to recommence with some kind of travel passports, showing that you're not going to carry the virus. After that, we do expect a recovery. We'd expect it to be slow and follow a similar pattern to coming out of the global financial crisis. By the time we get to 2024, we'll be somewhere approaching, but not quite yet, the 2019 levels of performance.
We will get there eventually. I won't go through everything on slide 46 again. It will be a tough winter. Recovery will rebound. There is a lot of pent-up demand that will come back as long as it's available to come back. China shows us that recovery is possible and is possible to at and beyond 2019 level quite quickly when things are under control. We don't think the demand for travel has been irreparably damaged. Thank you.
Thank you, Robin. If we go to page 49, please. We can drill down a bit into the Nordics and see the development for the Nordic capitals as a starting point. Where we see the Stockholm market as a red line with a slow but steady upward slope over the whole period. This really indicates the development for all these markets over the whole period. We can see a summer bump in all the other capitals, which we don't see in Stockholm, but over the whole period, the development has been pretty similar since the other capitals have come down after the summer bump to levels well below Stockholm's. That's probably due to the nature of the markets, where Stockholm is less of an individual travel leisure domestic market than the others.
If we go to page 50, we can have a look at Stockholm and closed hotels and the development for the available capacity in the market. This is of course correlated to the previous slide, where we can see that Stockholm had hotels being closed for a longer period of time, which makes sense, of course. After the summer, and the number of closed hotels, which this shows, even though the heading says otherwise, it's number of hotel rooms closed. We can see that it has come down to significantly lower levels after the summer and keeps going downwards. This, of course, indicates that the hotels probably see increased demand, which motivates them to open up. We can also see, as a gray line on the right scale, the development in available rooms, which has come down quite a bit since the beginning of the pandemic.
It was up a bit in the beginning where we had a couple of new hotel openings. Now we see not so much bankruptcies and involuntary closings, but more of voluntary closings, where hotels close down permanently due to not seeing enough business, even long-term. That's, of course, a positive indicator for the hotels staying open and staying in the market. If we look at page 51, where we see the development of the occupancy. Adjusted and with full capacity for 2020 as blue lines and 2019 as red lines. We can see that with the adjusted capacity, we have a significantly higher occupancy, which of course helps the hotels that are staying open. We do see this effect to some extent other years as well, but especially in the summer. Now it's more of a pronounced effect, of course.
If we compare the closed hotels in Stockholm to the closings in Norway, for example, this is on a national level, so it's for Sweden. We can see that in Norway, the closings were significantly higher in the beginning of the pandemic, but they came down just before the summer. That's most likely due to the nature of the markets as well. That Oslo is a stronger summer market in the type of market that we have now. We can also see that the closings have started to trend upwards in Norway as well, and that might be correlated to the development going forward, where we see less of the demand in Oslo than we see in Stockholm.
If we look a bit at the regional development compared to the major cities, we can see that there is really a dividing market here with the leisure markets performing very well in Q3. Whilst the major cities are the ones dragging the national figures down quite significantly, both in terms of price and in terms of occupancy. We have price on the y-axis and occupancy on the x-axis here. We can see most regional cities being placed in between those two groupings. What should also be noted here is that the price decreases are most likely or almost entirely due to the segment shift that we see. That this is what we can call leisure prices. J
ust as a comparison, if we look at 2019 and compare months like May for Stockholm, which is a typical business and meetings month, with July, for example, typical leisure month. We saw 2019, a difference of 42% in price between those two months alone. Price decrease of 30% in Q3 is probably reasonable given the segment shifts that we see.
If we look at the regional markets over time, we can really see the performance during the summer going up to very high levels for typical leisure markets. Almost the same as previous years for at least July and a bit into August as well. While the bottom lines indicate the meetings markets and the major cities. We see the regional cities being between 40% and 70% occupancy as of now. The largest cities being more of 20%- 40% occupancy. If we also look at Norway on page 55, we can see that the development is very similar, but a bit more accentuated in the peak and also in the downturn after the summer.
The development is very similar, where the more leisure-oriented markets are performing well during the summer and still being at a higher level than the major cities and also the airport markets, for example, which are very low. Looking a bit ahead at page 56, we can look at the occupancy on the books. Here we can see that the pickup has actually taken off quite a bit in October as compared to previous periods in Stockholm. We now have more than double the pickup on a monthly basis for the coming month, and we also see that the pickup is longer. During the summer, it was two to three months, but now we can see that it's up to a couple of months ahead where we have significant pickup. The curve for the whole period is also at a higher level.
There is a bit of optimism in that development. We don't see it to the same extent if we look at Oslo, for example. To some extent, not to the same extent. There is more of a stable development with a quite small pickup going forward, the curve is very sharp downwards for the months after the first couple of months. If we look at page 58, we can see the price development for the major capitals in the Nordics. We can see here that Stockholm had quite a positive development during Q3, up from about SEK 800 on average to well above SEK 900.
We can also see that Oslo has had a more stable development while Copenhagen and Helsinki is trending more downwards. That might be an indication in Stockholm, at least for a shift in segments that the business segment is picking up a bit now after the summer. Looking at page 59, we can see a part of that. This is the meetings market development for Sweden as a whole. We can see the number of meetings going up quite significantly after the summer. It's primarily smaller meetings that have increased quite a bit. Obviously that's due to the restrictions being in place right now, but it shows that there is a demand for meetings going forward. To sum up on page 60, there was a clear summer effect that lasted a bit into August, but has in most markets faded after that.
Over the whole period, we see this upward trend slow, but still it's going upwards. Stockholm is the more stable example in the region and Sweden as a whole as well. We can see that the closings are coming down, the temporary closings, but also that we have a tendency for higher, more permanent closings. Those being more voluntary. It's more of a business decision than anything else. We can also see if we look forward on the books curves that the pickup is picking up, so to speak. We have a significantly higher short-term pickup and the whole curve for the coming 12 months is higher than it has been previous months. We can also see indications that the business travel and the smaller meetings are slowly returning. We are still lacking the larger events and the larger meetings.
Of course, also the international travel is very limited. As had been mentioned previously, these two factors are most likely guided by restrictions when we see any comeback in these segments going forward. Okay. That's all from me.
Well, thank you very much to the guest speakers for the market update. We are now ready for Q&A.
Thank you. As a reminder, ladies and gentlemen, should you wish to ask a question, please press star and one on your telephone keypad. That's star and one should you wish to ask a question. Your first question comes from the line of Fredric Cyon from Carnegie. Please go ahead. Your line is now open.
Good morning. A couple of questions from my side. Starting off with the guidance you gave in connection with the Q2 reporting as comparing it with what you're seeing right now. Back then you said 25%-55% occupancy through September through December. Now you're speaking more about individual markets. Given new restrictions or the view that you communicated in Q2 in line with your current view on the fourth quarter, i.e., 25%-55% occupancy in your core markets?
Yeah, it is in line, perhaps a little bit slower in some markets in Belgium and a little bit stronger in Nordic.
With regards to Q1 2021, you said back then that you had expected an indicative occupancy of 30%-60%. I couldn't see a statement concerning the Q1 development in the third quarter. How do you reckon that will develop compared to what you stated back then?
Yeah. Well, as we said in report that there is some uncertainty because of the last restrictions, we would like to see how they develop further out. In general, yes, we still believe in that forecast. Of course, we are in the hands of this government restriction. If they will go up even more in Q4, hopefully not, it could be that they have to be extended a little bit out in 2021 or other way around. If the restriction will go down, it might be that the demand will go up and be even stronger.
In terms of guidance for Q4, you're stating a stable outlook for Property Management. Seasonally, Q4 is weaker than Q3. Should we interpret that as you expect the recovery to improve QoQ in the fourth quarter? Or is that seasonally adjusted stable?
Well, sorry, I missed it. You said in four?
Yeah. Basically, you're guiding towards a stable development for Property Management portfolio in Q4.
Yeah.
However, seasonally Q4 tends to be weaker than Q3. Is that guidance based on the usual seasonality or is just a plain saying that we should expect similar kind of revenues from Property Management QoQ?
Yeah. Exactly. As you say, Q3 is normally a stronger quarter than Q4. Now we see that Q4, it's on the part of the recovery phase, and we believe that it will be the similar development for Pandox side in Property Management in Q4 as we had report in Q3.
That's clear, Anders. Two final questions. On the forward ramp in receivables, you had SEK 421 million in Q3. When do you expect to receive those? Should we expect receivables to increase or decrease during the coming quarters?
Hi. They will most likely increase slightly, not very much, but be slightly south of SEK 500 in the end of the year, to then starting to decrease. These are the same agreements which we discussed with our operators in Q2 and Q3. It's been for 2020. They're gradually being repaid end of Q4 and then going into 2021.
Thanks, Liia. My final question on value changes. You're stating that the lower values are based on lower cash flow projections for 2020 through 2022. Does that mean that you're expecting worse cash flow development in the second half of 2020 than you originally envisaged in the Q2 report?
Yeah. As you know, we do 156 individual internal valuations each quarter. As every quarter goes by, you of course leave a bad quarter behind. In this quarter, the decrease in Property Management was very marginal, but I think the proportional downward adjustment was more for Operating Activities. That was more an effect of the fact there were new restrictions in Brussels, in U.K. Of course we do, as you know, 10-year discounted cash flow, terminal value, everything. The downward adjustment this quarter is mainly a function of the new restrictions which came into place which tend to put operational businesses a little bit further away.
Perhaps a final follow-up on that. On the theme of property value changes, there hasn't been that many hotel deals taking place in Europe during the last few months. Are there any that you think are worth highlighting as proof of your current book values?
Well, I think Anders can add on to it, there hasn't been any real number of transactions. There have been no conclusive or related transactions. If anything, we are actually quite firm on our assumptions. We are stable. It's 5.42% and 6.38% for Operating Activities.
There have been a handful of acquisitions done so far, and the pricing of these hotels have been good. I would say surprisingly good, h igh values. That shows that the interest for buyers has been strong in this phase. If that will change, we don't know.
Okay. Thank you very much for answering my questions.
Thank you.
Thank you.
Thank you. Your next question comes from the line of Christopher Fremantle from Morgan Stanley. Please go ahead.
Hi. Good morning. I was just intrigued by the presentation from STR, particularly the forecast RevPAR performance going into 2021, which I think is suggesting that RevPAR in 2021 will be around 40% lower than in 2019. Can I just ask for your comments on that with reference to your portfolio and specifically for your Operating Activities business where you don't have the minimum rent? As we go into 2021, where you think your businesses and your portfolio's RevPAR will compare to that STR forecast?
Good morning, Christopher. You know that Robin is totally independent from our side. We have a little bit different view, that is based on basically that in STR's numbers, you have a lot of international hotels and premium hotels and large meeting hotels in bigger city. In Pandox, you have most of the hotels are high-quality hotels. It's domestic and regional market, we're expecting to go much better than the total market. That is why we have a much more positive view, I think that's important to say again, that 84% of Pandox value is coming from domestic and regional markets. If they would have been 50/50, we will agree about the RevPAR trend from our side. In general, I believe Robin is right when he talk about the full market.
Again, we are more active in this segment of domestic and also, as you know, we have strong focus also the Nordic side, which happen to be normally maybe less good in good days and much better in bad days. That means that we will probably have little bit different curve as we had in other crisis as well. We believe that if the restriction will go down, and I don't know anything about that, so please don't ask me. If the restriction will go down, then as you see in the summer, it come up very strong. I can say, if the restriction wouldn't have come in Belgium and Holland, our Q4 would have been also very strong in operator activities. You can see, we believe that the underlying markets are strong. The domestic market, which we have focused on, have made comeback.
So quick as people now are allowed to travel again in out of Nordic, they will continue to do that. Then 2021 can be quite interesting. Again, it very much related to a number of restrictions. Also having said again, some markets are more resilient than other. So it's like a tap. You put it on more restrictions, less demand, and other way around. But the market is there.
Thank you.
Yeah.
Thank you. As a reminder, ladies and gentlemen, star and one should you wish to ask a question. There are no further questions over the phone lines. Please continue.
Yes, we have a couple of questions from the web. I will start with two questions from Simen Mortensen at DNB. The first one is whether all rent have been paid according to timelines.
Yes. As I said, they have been according to timelines. The SEK 421, which we have in receivables, they have been paid also. The part of those which should have been paid in September and October have been paid accordingly.
Second question from Simen is about the lockdown in Belgium, particularly relating to operator activities and about our view for the fourth quarter in terms of earnings, whether it will be as bad in the second quarter or if we are able to cut costs more this time.
The operator activity will be affected in Belgium and The Hague. In Germany, it will be slightly better. That means that the number will be something between.
A final question as it stands. It's from Albin Sandberg at Kepler. The first question is, how do the negotiations with operators go? Are there any plans to adjust lease terms? When is the next major renegotiation of fixed minimum lease terms?
All negotiation with our partners has been made, they are paying according to this new agreement. We don't see any need for new negotiations. We are taking our part by the turnover-based model, where we get less rent, and then we offer also our partners better payment terms. When these two activities from our side, if that's not enough, then the operator needs to go to their banks and their shareholders for help and support. We believe that is something they all respect, and we expect that everybody will continue to respect those agreement as we have recently signed.
The second question from Albin is, do you feel banks treat you differently now, given hotel exposure? More strict lending conditions or similar?
No, actually, as same as before. If anything, actually, I think all banks have taken a good view. There's nobody to blame on this pandemic, but everybody's supporting. We have good dialogue and being supported in both refinancing, new financing, as well as looking at new financing. No change.
The third and final question is if we have considered any alternative use for any of our hotels, for instance, turn them into residential.
No. We believe we are in good market, in good position. That will be very expensive to convert them to other things, I believe. We see that the market recently come back strong. That will be for us no reason to change the profile in our properties.
Ladies and gentlemen, thank you everyone to be listened to us today. I would like to remind you that we have a hotel market day on the 17th of November. The program is focused on what's happened, the short trends for the effect for the hotel market in this pandemic world. Please visit our website and sign up. It's close to 1,000 people already who will be there. From our side, we say thank you, everyone. Stay safe, wash your hands, stay in our hotels. Goodbye.